NEW YORK – The ongoing political stalemate in the United States holds two major implications for the international monetary system. The better-known consequence has been deepening uncertainty about the US dollar, the main global reserve currency, and US Treasury securities, supposedly the world’s “safest” financial asset. Not surprisingly, the major investors in US Treasuries, China and Japan, have expressed alarm. Simply put, the global economy has at its center a dysfunctional political regime that generates recurrent threats of default on the world’s major reserve asset.
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